A British former trader has had a conviction in the US for “rigging” interest rates overturned in spite of pleading guilty.
Mike Curtler, formerly of Deutsche Bank, was among 38 former traders and brokers prosecuted after the US Department of Justice declared their conduct illegal 10 years ago.
But earlier this year a US appeal court decided no rules had been broken.
Mr Curtler’s lawyer said they were “extremely pleased” with the decision.
In the past eight years, 38 former brokers and traders have been prosecuted over emails and messages asking colleagues to tweak their estimates of the cost of borrowing cash to suit their bank’s commercial interests – a practice which the US Department of Justice declared to be illegal interest rate “rigging” in 2012, when it fined Barclays Bank for it.
The estimates of the interest rates banks were paying were submitted each morning as part of the process of arriving at Libor (London Interbank Offered Rate), the index that tracks the cost of borrowing cash.
Just as the FTSE tracks the prices of shares, Libor tracks the interest rates banks are paying to borrow cash on the wholesale money markets.
For the past 35 years, it has been used to set interest rates on millions of residential and commercial loans around the world.
To work out Libor each day, 16 banks answer a question – at what interest rate could they borrow money? They submit their answers and an average is taken.
The evidence against Mike Curtler and other traders consisted of messages and emails asking for those interest rates to be submitted “high” or “low”.
Mike Curtler admitted he had acted on the emailed requests and, faced with the risk of up to 15 years in a US jail if he went to trial, pleaded guilty.
But in January this year a US appeal court ruled that the requests were not illegal after all, acquitting former Deutsche Bank traders Gavin Black from Middlesex and Matt Connolly from New Jersey.
Now US courts are acquitting even those who pleaded guilty, such as Mike Curtler, saying they must be viewed as innocent.
“I’m very glad the US courts have decided that what we did was not criminal. The past decade has been horrible but hopefully we can now start to rebuild,” Mr Curtler told the BBC.
Mr Curtler’s lawyer, David Krakoff, said: “We are extremely pleased that Mike Curtler has been cleared and that the courts have decided that there was no wrongdoing whatsoever.”
A month ago New York court threw out the conviction of former trader Tim Parietti, 56, who had also pleaded guilty, ordering the government to repay a £1m fine.
It leaves the UK as the only country in the world where convictions for “rigging” interest rates have, so far, been sustained.
Nine have been convicted in the UK, including Tom Hayes, Peter Johnson, Jonathan Mathew, Alex Pabon, Jay Merchant, Christian Bittar, Philippe Moryoussef, Carlo Palombo and Colin Bermingham.
